The new FINRA report on digital investment advice makes it clear: If an advisor or broker is using a risk survey that maps to a model portfolio—be it a managed account or robo advisor technology for advisors— they should assess whether the algorithm is consistent with the firm’s investment process. Otherwise, they’re taking on the risk that the solution is not suitable.

If you are using someone else’s code or algorithms to onboard your clients and invest their money—without having the ability to interject yourself into the situation—you’re assuming a high degree of liability since you cannot attest to the suitability of that investment. You’re taking at face value that the algorithms are accurate.

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